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State opens civil investigations of recruiting, financial aid at for-profit colleges

The Florida Attorney General's Office has opened civil investigations into allegations of deceptive practices at five for-profit colleges, three with branches in the Tampa Bay area.

The University of Phoenix, Everest University and Argosy University all have students in Pinellas or Hillsborough counties.

The investigations were opened Monday and assigned to the agency's economic crimes division in Fort Lauderdale. But they are not limited to South Florida, said attorney general's spokeswoman Ryan Wiggins.

"We are looking at the advertising practices and other issues at these colleges as a whole," Wiggins said in an e-mail to the St. Petersburg Times.

The other two Florida schools under investigation are Kaplan, which is a wholly owned subsidiary of the Washington Post Co., and the MedVance Institute.

With each school, the Attorney General's Office is investigating "alleged misrepresentations regarding financial aid" and "alleged unfair/deceptive practices regarding recruitment, enrollment, accreditation, placement, graduation rates, etc.," according to its website.

If the schools broke Florida's consumer protection laws, they could get civil fines of up to $10,000 for each violation.

All five schools were on a list of 15 for-profit colleges secretly visited last summer by the U.S. Government Accountability Office.

In August, GAO investigators said recruiters at the for-profit colleges lied, engaged in high-pressure sales tactics and sometimes encouraged students to commit fraud on financial aid applications to get more loans.

GAO investigators did not visit any for-profit schools in the bay area, but did check out-of-state campuses of the University of Phoenix, Everest and Argosy.

All three schools, plus Kaplan, said Wednesday the state had yet to tell them they were under investigation.

"I can't say anything about the impact of something I don't have any details on," said Kent Jenkins Jr., a spokesman for Corinthian Colleges, which has 10 branches of Everest in Florida, including one on East Bay Drive in Largo.

Everest polices its 2,400 admissions representatives by sending "secret shoppers" into their offices posing as students. It recently decided to start making video recordings of the visits.

"When we find it, we act on it," Jenkins said. Last year, it fired 60 admissions employees for cause.

Argosy's parent company, Education Management Corp., said it would cooperate fully and pledged to "fully support efforts to root out fraud and deception across all of higher education."

Kaplan said it planned to cooperate fully in the investigation. The Apollo Group, the parent company of the University of Phoenix, said it supports efforts to enhance accountability.

Florida's investigation comes as Congress digs into the business practices of for-profit colleges.

Boosted by aggressive television advertising, enrollment in such schools has more than tripled in the past decade to nearly 2 million students. Meanwhile, federal financial aid to students at about 2,000 for-profit colleges has quintupled.

At stake is tens of billions of dollars in federal student loans and Pell grants for poor students. Many for-profit schools rely on federal student aid for nearly 90 percent of their total revenue. In the 2008-09 school year, they received nearly one-fourth of all federal aid to college students.

But the GAO says their students were more likely to default on their loans, ruining their credit and sticking taxpayers with their bills.

In response, the U.S. Education Department has proposed regulations known as "gainful employment" rules to cut off federal aid to for-profit colleges whose graduates cannot earn enough to repay their loans.

But for-profit schools say they're being singled out unfairly. Socioeconomic background is the single biggest factor determining whether students at for-profit schools or traditional ones default on loans, Jenkins said.

The for-profits contend that the proposed rules could reduce educational access for poor and minority students.

The Obama administration wants to increase the number of college graduates.

"We think this (gainful employment rule) would do exactly the opposite," Jenkins said.

State opens civil investigations of recruiting, financial aid at for-profit colleges 10/20/10 [Last modified: Friday, October 22, 2010 7:09pm]
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